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- **Merger Accretion**: OBDC II merger adds $1 billion in assets, with expected 15-20bps ROE accretion from cost savings and asset yield differences.
- **Dividend Sustainability**: Q4 base dividend of $0.37 supported by $0.31 spillover income; 2026 outlook for potential reduction in a lower-rate environment.
- **Share Buyback**: $200 million buyback program to capitalize on 82% NAV discount, with no lockups for OBDC II shareholders.
- **Market Momentum**: Q3 originations of $1.3 billion, 33% pipeline growth in September, and 89% senior secured portfolio driving credit strength.
- **Portfolio Resilience**: 1.3% nonaccrual rate, 2.0x interest coverage ratio, and mid-single-digit EBITDA growth highlight credit quality.

**【CEO Summary Section】**
- Reported adjusted NII per share of $0.36, reflecting ROE of 9.5%, consistent with long-term averages despite a lower rate environment.
- Announced merger with OBDC II, adding $1 billion in net assets and enhancing scale with a combined portfolio of $18.9 billion across 239 companies.
- Emphasized direct lending focus, with 89% of portfolio in senior secured loans, and below-industry-average nonaccrual rate of 1.3%.
- Highlighted portfolio resilience, with average revenue and EBITDA growth of mid- to high single digits, and interest coverage ratio improving to 2.0x.

**【CFO Financial Commentary】**
- Q3 total net assets of $8 billion, with net leverage of 1.22x, within target range of 0.9-1.25x.
- Adjusted NII per share of $0.36, down from $0.40 due to lower nonrecurring income ($0.02 vs. $0.05 in Q2).
- Board declared a $0.37 base dividend for Q4, with spillover income of $0.31 supporting sustainability.
- Liquidity remains strong with $3 billion in cash and capacity, and no material short-term maturities.
- Merger with OBDC II expected to be accretive, with $5 million in first-year cost savings and potential for lower-cost capital over time.

**【Q&A Highlights】**
- **Merger Impact**: OBDC II's higher nonaccruals (60bps above OBDC) are immaterial due to overlap in portfolio names. Expected ROE accretion of 15-20bps from synergies and asset yield differences.
- **Dividend Outlook**: Base dividend may adjust in 2026 as rates decline, with historical reference point of $0.33 in a 3% rate environment. Current dividend of $0.37 is $0.01 above NII, supported by spillover income.
- **Share Repurchases**: New $200 million buyback program to address undervaluation (82% of NAV). No lockups for OBDC II shareholders, but tender history suggests limited selling pressure.
- **Market Activity**: Q3 originations of $1.3 billion, with 40% add-ons. Pipeline up 33% in September, driven by M&A activity and syndicated market spread tightening.
- **Credit Performance**: Nonaccruals at 1.3%, stable amendment activity, and average revolver draw below 20%, reflecting portfolio resilience.


Blue Owl Capital Corporation (OBDC) Q3 2025 Earnings Call Transcript

- **Strong Financial Performance**: Q2 ROE of 10.6% and NII of $0.40 per share, supported by stable portfolio performance and $0.05 per share in onetime repayment income.
- **Leverage Management**: Reduced net leverage to 1.17x, with plans to maintain near the high end of the target range (1.15-1.20x).
- **Synergy Potential**: Expected 50-75bp ROE improvement from OBDE merger synergies, including portfolio rebalancing and financing optimizations.
- **New Growth Drivers**: 10% of Q1 originations in alternative credit and JVs, with equipment leasing JV targeting low double-digit yields.
- **Market Outlook**: Cautious optimism on H2 deal activity, with spreads troughed and potential to widen if public market volatility increases.
- **Portfolio Resilience**: Below-industry nonaccrual rates and stable marks, with minimal impact from tariffs on core portfolio companies.

**【CEO Summary Section】**
- Achieved ROE of 10.6% and adjusted NII of $0.40 per share, marking the 12th consecutive quarter of double-digit ROE.
- Portfolio net asset value (NAV) per share was $15.03, down $0.11 from the prior quarter, with modest write-downs on a few monitored companies.
- Emphasized defensive strategy with focus on large, diversified businesses, resulting in below-industry nonaccrual and loss rates.
- Expanded into alternative credit, digital infrastructure, and equipment leasing through cross-platform joint ventures, such as a new equipment leasing JV formed in Q2.
- Cautiously optimistic on a potential rebound in deal activity in H2 2025, driven by conversations with private equity sponsors.

**【CFO Financial Commentary】**
- Total portfolio investments reached $17 billion, with net leverage of 1.17x (target range: 0.9x-1.25x) and $4 billion in liquidity.
- Adjusted net investment income (NII) of $0.40 per share, up $0.01 Q/Q, driven by $0.05 per share in onetime repayment income.
- Dividend coverage at 109%, with $0.33 per share in spillover income, supporting steady dividend payments.
- Raised $500 million in 5-year notes to optimize capital structure post-merger with OBDE.
- Synergies from the OBDE merger are expected to contribute 50-75 basis points to ROE over time, primarily through portfolio rebalancing and financing optimizations.

**【Q&A Key Highlights】**
- **Deal Flow and Leverage**: Q2 originations of $1.1 billion (net paydowns of $1.9 billion) reduced leverage to 1.17x, with plans to maintain near the high end of the target range (1.15-1.20x). Cautious optimism on H2 deal activity, including public-to-private transactions and refinancings.
- **New Strategies**: 10% of Q1 originations were in alternative credit and JV investments, with potential for 10-15% of portfolio allocation over time. Equipment leasing JV expected to generate low double-digit yields.
- **Market Trends**: Spreads have troughed, with potential to widen if public market volatility or capital consumption occurs. Direct lending maintains a 150-200bp premium to broadly syndicated loans.
- **Tariff Exposure**: Portfolio exposure to tariffs narrowed to a smaller subset of companies, with sponsors actively diversifying supply chains.
- **Credit Cycle**: Portfolio companies show modest revenue/EBITDA growth, with no signs of broader stress. Incumbency and relationship depth enable competitive refinancing opportunities.


Blue Owl Capital Corporation (OBDC) Q2 2025 Earnings Call Transcript

- **Post-Merger Resilience**: Q1 ROE of 10.2% and 10.8% dividend coverage highlight strong post-merger performance.
- **Defensive Portfolio**: 94% U.S.-based borrowers and focus on noncyclical sectors limit trade policy risk.
- **Spread Stability**: Despite M&A slowdown, private credit spreads remain stable, with deals done at similar terms to prior quarters.
- **Liquidity Strength**: $3B+ liquidity and 1.26x net leverage provide flexibility to navigate uncertain markets.
- **Earnings Visibility**: Base dividend supported by 106% coverage, with spillover to cushion short-term rate volatility.

**【CEO Opening Remarks】**
- Post-merger Q1 results reflect combined OBDC and OBDE performance, with ROE of 10.2% and adjusted NII of $0.39 per share.
- Portfolio credit quality remains strong, with nonaccrual rate at 0.8% (vs. 0.4% pre-merger) and LTV of 40%.
- Proactive portfolio review amid trade policy uncertainty confirms resilience, with 94% U.S.-based borrowers and focus on defensive sectors (healthcare, business services).

**【President Portfolio Update】**
- Q1 originations: $1.2B commitments, $0.8B fundings, with 90% in first lien/unitranche.
- Median EBITDA of portfolio companies grew to $120M, outpacing U.S. GDP growth.
- PIK income declined to 10.7% of total income, driven by legacy OBDE exposure and borrowers transitioning to cash pay.

**【CFO Financial Highlights】**
- Q1 GAAP net income: $12.8M; adjusted NII: $0.39 (down $0.08 vs. Q4 due to reduced onetime income).
- Net leverage: 1.26x (target 0.9x-1.25x), with $3B+ liquidity and no near-term maturities.
- Interest expense optimization: CLO resets, SPV amendments, and $142M high-cost note repayment.

**【Q&A Key Takeaways】**
- **Market Trends**: Public loan market volatility has stabilized spreads, but M&A activity remains muted due to policy uncertainty.
- **Dividend Policy**: Base dividend coverage at 106%, with $0.34 spillover to support consistency.
- **Leverage Strategy**: High-end of target range (1.26x) reflects merger onetime costs, but flexibility to deploy capital selectively.
- **Economic Risks**: Portfolio stress indicators (revolver usage, interest mods) remain benign, with sponsors' equity support as a safety net.


Blue Owl Capital (OBDC)-8 May 25-2025 Q1 Earnings call transcript

- **Record 2024 Performance**: $1.89 per share NII, 12.4% ROE, $1.72 dividend payout (+9.7% YoY).
- **Scale Expansion**: $13.5B+ AUM post-merger, 2nd largest BDC by assets.
- **Resilient Portfolio**: 76% first lien, 1.8x interest coverage, 0.4% nonaccrual rate.
- **2025 Outlook**: ROE ~10-11% (down 200bps from 2024), offset by 50-75bps from synergies.
- **Strategic Growth**: $750M ATM program for accretive capital raises, expanding into alternative credit & data centers.

**【CEO Opening Remarks】**
- Q4 2024 NII of $0.47 per share, full year NII of $1.89, with ROE of 12.4% (8th consecutive quarter above 10%).
- Post-merger with OBDE, total assets exceed $13.5 billion, making OBDC the 2nd largest publicly traded BDC.
- 2024 dividend payout of $1.72 per share (+9.7% YoY), with stable NAV of $15.26.
- Portfolio credit quality remains resilient: nonaccrual rate 0.4%, 50% of originations from existing borrowers.
- Merger synergies expected to deliver >$5 million in annual savings and lower cost of capital.

**【CFO Financial Highlights】**
- Q4 GAAP net income: $42.0 million; Non-GAAP EPS: $1.08 (vs. $0.95 prior quarter).
- Leverage ratio: 1.19x (target range 0.9x-1.25x), total liquidity $3.2 billion.
- Expanded revolver to $3.0 billion (SOFR +165bps) and issued $400 million unsecured notes at T+163bps (tightest BDC spread on record).
- Announced $750 million ATM equity program for accretive capital raises.

**【Portfolio & Credit Update】**
- 76% of portfolio in first lien/unitranche; pro forma with OBDE: 78% first lien exposure.
- Median EBITDA: $119 million; interest coverage: 1.8x (vs. trough of 1.6x).
- 90% of transactions led/co-led; average deal size $350 million (vs. $200 million in 2021).
- No new nonaccruals in Q4; PIK income 12.5% of total income (down from 14%).

**【Q&A Key Takeaways】**
- 2025 ROE outlook: ~10-11% (down from 12%+ due to lower rates/spreads), offset by 50-75bps from merger synergies.
- 70% of portfolio rate resets completed; remaining 30% to benefit from 100bps rate decline.
- M&A activity expected to pick up in 2025, driven by elevated private equity dry powder.
- Strategic equity investments (e.g., Wingspire, Amergin) to generate 10-12% returns and diversify risk.
- No signs of credit stress: stable watch list, no material amendments, 130-person credit team monitoring macro risks.

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